AGL Energy to go net-zero by 2035 as Australia’s biggest carbon emitter closes coal-fired plants

Australia’s largest carbon emitter, AGL Energy, will go net zero in what it says is an “incredible step forward.”

The country’s largest electricity producer announced Thursday the shutdown of all coal-fired generation by the end of fiscal year 2035, with annual greenhouse gas emissions cut from 40 million tons to net zero.

Incoming interim CEO Damien Nicks admitted during a conference call that the new strategy would have “a very serious impact on our people and communities.”

But if AGL shuts down coal, former coal plants in NSW, Victoria and South Australia will be turned into industrial hubs powered by renewable energy.

“We all have a shared ambition to make this happen, federally, as well as states and shareholders,” said Mr. Nicks.

“This announcement is an incredible step forward…this is a strategy for the next 12 years.”

Steam coming from the cooling towers of AGL Energy’s Loy Yang coal-fired power station. The energy giant announced Thursday that it would close the Latrobe Valley power plant by mid-2035, up to 10 years ahead of schedule.

Chair Patricia McKenzie said AGL will be net zero of operations after the closure of the Liddell and Bayswater power stations in NSW and the Loy Yang power station, which provides nearly a third of Victoria’s power.

Shares in AGL underperformed in a sharply higher market on Thursday, gaining a penny to $6.61 in afternoon trading as investors searched for more detail.

AGL revealed it would take a $700 million write-off to accelerate Loy Yang’s exit by a decade, and said it would review dividend payments.

The exact date when the Loy Yang coal mine will be closed has not yet been decided.

Nor were details available on spending up to $20 billion in 2036 on large batteries, solar and wind farms.

This shopping list includes a new interim target to have up to five gigawatts of renewable energy by 2030, compared to a planned pipeline of 3.2 GW of projects.

This year, billionaire shareholder Mike Cannon-Brookes brought an end to the energy giant’s planned split, which would have created an energy retailer and divested aging coal-fired operations that would have operated longer.

Atlassian billionaire Mike Cannon-Brookes foiled AGL’s split plans

Seeking more urgent change, his investment firm Grok Ventures proposed four independents for election to its board of directors: former energy regulator Kerry Schott, sustainability expert Christine Holman, Tesla’s Mark Twidell and veteran board chairman John Pollears.

“There is a tremendous amount of work ahead,” said a Grok spokesperson.

“While this is a positive step in the right direction, as Australia’s largest emitter and leading energy company, AGL must take a leading position to meet the Paris target below 1.5 degrees.”

Ms McKenzie said the board planned to appoint more directors to oversee the major work program and would make a recommendation on the Grok nominations shortly.

Greenpeace Australia Pacific CEO David Ritter said AGL has been a “corporate muppet show ignoring clear industry trends.”

He said Australia’s clean energy transition will require the Loy Yang plant to close by 2030, the Bayswater coal-fired power station to close by the same date, and help households turn off toxic gas.

The AGL Power Station in Adelaide

Liddell in NSW was already slated to close next year and Bayswater in the Upper Hunter Valley by 2030-33, so the fast-tracking strategy only applies to Loy Yang.

“We need Bayswater in the market until 2033,” Nicks said.

Advocacy group Environment Victoria says the coal exit by 2035 is “an improvement, but still not credible” and falls short of the Paris-aligned plan demanded by AGL shareholders last year.

AGL also released updated guidance, saying revenues would remain “resilient,” with the generator well positioned to take advantage of higher electricity prices.

But AGL said the current high-cost economic environment “remains a challenge” for the Torrens Island gas-fired power plant, which is more than 50 years old and is South Australia’s largest plant.

AGL also published its first Climate Transition Plan, with shareholders to vote on it and new directors on November 15.